Exhibit 10nn
August 11, 1994
Mr. Steve Mason
Homeland Stores, Inc.
400 N.E. 36th Street
Oklahoma City, Oklahoma 73105
Dear Steve:
The purpose of this letter is to confirm, amend and restate
the terms of your employment with Homeland Stores, Inc. ("Homeland").
This letter supersedes in all respects all prior agreements and
understandings, whether written or oral, express or implied, between you
and Homeland and any of its affiliates relating to your employment.
1. Duties
You will be employed in such executive capacities for
Homeland, Homeland Holding Corporation ("Holding") or any subsidiary of
Homeland (the "Homeland Group") as may be determined from time to time
by or under the authority of Homeland's Board of Directors. You will
devote all of your skill, knowledge and full working time (reasonable
vacation time and absence for sickness or disability excepted) solely
and exclusively to the conscientious performance of such duties.
2. Term
This letter agreement shall be effective as of July 1, 1994
and expire as of June 30, 1996, unless sooner terminated by reason of
your death or Disability (as defined hereinafter) or in accordance with
paragraph 8 or paragraph 10 hereof. For purposes of this letter
agreement, "Disability" is defined to mean that, as a result of your
incapacity due to physical and mental illness, you shall have been
absent from your duties to the Homeland Group on a substantially full-
time basis for six consecutive months, and within 30 days after Homeland
notifies you in writing that it intends to replace you, you shall not
have returned to the performance of your duties on a full-time basis.
3. Base Salary
As compensation for the duties to be performed by you under
the terms of this letter agreement, Homeland will pay you a base salary
in the amount of $130,500 per annum. It is contemplated that Homeland
will review your base salary from time to time and, at the discretion of
the Board of Directors, may increase your base salary from time to time
based upon your performance, then generally prevailing industry salary
scales and other relevant factors. (Such annual base salary, as it may
hereafter be increased, shall be referred to as your "Actual Salary").
4. Incentive Bonus
During the term of this letter agreement, you will be
entitled to participate in Homeland's annual incentive compensation
program (the "Bonus Plan") in effect from time to time at a level
commensurate with your position. Notwithstanding the foregoing, for
1994 your annual bonus opportunity at the target level of performance
shall be 100% of your Actual Salary and in no event shall your annual
bonus opportunity at the target level of performance for years after
1994 be less than 50% of your Actual Salary.
5. Retention Bonus
Subject to the provisions of this paragraph 5, you shall be
entitled to receive a special one-time non-recurring cash bonus in the
amount determined in accordance with the schedule attached hereto as
Exhibit 1 if, on or prior to the End Date (as defined below), there
shall occur
(i) the closing of a sale (a "Stock Sale") of at least 50%
of the Class A Common Stock of Holding, par value $.01 per share
(the "Stock") to any person or entity (a "Third Party Purchaser")
other than any partnership, fund or other investment vehicle
managed or advised by Clayton, Dubilier & Rice (an "Affiliated
Fund") and other than any affiliate of such an Affiliated Fund
(Homeland executive officers, management or employees shall not be
deemed to be affiliates of such an Affiliated Fund),
(ii) the effective date of a merger of Holding with or into
another corporation immediately following which the persons or
entities who were the shareholders of Holding immediately prior to
the merger (together with any affiliates thereof, any Affiliated
Fund and any affiliates of an Affiliated Fund) own, directly or
indirectly, less than 50% of the voting power of all voting equity
securities of the surviving or resulting entity (a "Merger") or
(iii) the adoption of a plan of liquidation of Holding
following the sale of substantially all of its assets (including,
without limitation, the common stock of Homeland) to one or more
Third Party Purchasers (a "Liquidation"); and
as a result of such Stock Sale, Merger or Liquidation (a "Trigger
Event") the shareholders of Holding receive cash and/or other property
(the "Consideration") with respect to the Stock, having an aggregate
value (as determined in good faith by the Board of Directors of Holding)
of more than $1.73 per share (the "Threshold Amount"). For purposes of
this paragraph 5, the End Date shall mean the later of (i) December 31,
1995 or (ii) if a definitive sale agreement or merger agreement has been
executed prior to December 31, 1995 and the closing of which occurs not
later than February 28, 1996 (or such later date as the Board of
Directors of Holding shall designate), the date on which such Stock Sale
or Merger occurs.
Except as otherwise provided in this paragraph 5, payment of
the Retention Bonus shall be made at the same time as the Consideration
is distributed in full to shareholders, provided that (i) in the event
that any partial distribution of the Consideration is made to the
shareholders of Holding, whether as an extraordinary dividend or
otherwise, a pro-rata payment of the Retention Bonus (based on the
percentage that the partial distribution to shareholders is of the
Consideration expected to be paid to shareholders, as determined by the
Board of Directors of Holding) shall be made at the time of such
distribution if, and only if, the Board of Directors of Holding shall
determine that, based on its then best estimate of the amount to be paid
as the Consideration, a Retention Bonus will be payable in accordance
with this paragraph 5; (ii) if the Consideration has not been
distributed to shareholders prior to the second anniversary of the
Trigger Event, on such date you shall be paid the amount, if any, that
the Board of Directors of Holding shall determine to be payable as a
Retention Bonus (based on its then best estimate of the amount to be
paid as the Consideration); and (iii) the Board may authorize an advance
payment of all or any portion of the Retention Bonus at any time after
the occurrence of a Trigger Event, if the Board of Directors of Holding
determines in good faith that the shareholders are expected to receive
Consideration in excess of the Threshold Amount.
Notwithstanding anything else contained in this paragraph 5
to the contrary, no Retention Bonus shall be payable to you under this
paragraph 5 unless (i) you are still an employee of the Homeland Group
on the date on which any Trigger Event occurs and (ii) you do not
voluntarily terminate your employment after that date without the
consent of the Board of Directors of Homeland; provided that if a
Trigger Event occurs within ninety (90) days after the date, if any, on
which your employment is terminated by Homeland without Cause (as pro-
vided in paragraph 10 below) or by reason of your death or Disability,
Homeland shall pay you, at the same time as payment is made to other
Homeland executives with respect to their retention bonuses, an amount
(in addition to any amount payable under paragraph 10 on account of such
termination) equal to the product of (i) the amount that would otherwise
have been payable to you hereunder times (ii) a fraction (not to exceed
1), the numerator of which is the number of full or partial calendar
months during which you were employed since July 1, 1994 and the
denominator is the total number of full or partial calendar months from
July 1, 1994 to the date payment is made to other Homeland executives
with respect to their retention bonuses.
Notwithstanding anything else contained in any other
compensation or benefit plan, program or arrangement of Homeland to the
contrary, the amount, if any, payable as a Retention Bonus (and any
amount payable under paragraph 9 below) shall (i) not be taken into
account in any manner in calculating any other benefits payable to you
under any such plan, program or arrangement and (ii) be in lieu of any
other retention compensation program in which you would be entitled to
participate under Homeland's generally applicable policies or proce-
dures. To the extent required to satisfy the intent of this paragraph
5, this letter agreement shall be deemed to be an amendment to the terms
of any such plan, program or arrangement.
6. Expenses
Homeland will furnish, insure and maintain for your use
while you are employed by Homeland an automobile of a type commensurate
with your status, selected by you and approved by the Board of
Directors. Upon termination of your employment with Homeland, you will
have the option to purchase such automobile at its fair market
(wholesale) value. Homeland will reimburse you for reasonable travel,
lodging, meal and other appropriate expenses incurred by you in
connection with your performance of services under this letter agreement
upon submission by you of evidence, satisfactory to Homeland, of the
incurrence and purpose of each such expense.
7. Employee Benefits
Homeland shall provide you with the same medical, dental,
vision, life and disability insurance and other welfare benefits (the
"Welfare Benefit Arrangements") as it provides to its other executive
officers. During the term of this letter agreement you will also be
eligible to participate in Homeland's retirement and profit sharing
plans in effect from time to time on the same basis as Homeland's other
executive officers, subject to the terms and provisions of such plans.
You shall be entitled to paid vacation in accordance with Homeland's
generally applicable plans, policies or procedures.
8. Termination of Employment Following a Change of Control
Upon any termination of your employment, whether voluntary
or involuntary, within 180 days following a Change of Control (as
defined in the Revolving Credit Agreement, dated as of March 4, 1992, as
amended, between Homeland, Holding and Union Bank of Switzerland, New
York Branch, as agent) or a Trigger Event, Homeland will pay you an
amount equal to the sum of
(i) your Actual Salary in effect immediately prior to the Change
of Control;
(ii) an amount equal to the product of (A) your target bonus
under the Bonus Plan for the year in which your termination
occurs and (B) a fraction, the numerator of which is the
number of days during such year prior to and including the
date of your termination of employment and the denominator
of which is 365, provided that if your termination occurs
during 1994, such amount shall be based on target bonus
without pro-ration but shall be reduced, to the extent
applicable, by any amount paid to you under the Bonus Plan
for 1994 prior to the date on which your termination occurs;
and
(iii) the amount otherwise payable to you upon a Change of Control
under Homeland's generally applicable plan, policies or
procedures in respect of the 10% reduction in the base
salaries of all Homeland management personnel, effective as
of June 1, 1993 (which amount shall be reduced to the extent
that your base salary actually paid at any time after June
1, 1993 exceeded the base salary payable to you immediately
prior to such date).
Homeland will pay you the cash amounts set forth in the
immediately preceding paragraph in a lump sum payment no later than 5
business days after the date your employment terminates or in monthly
installments, as directed by you at your option. Such amounts will not
be subject to any offset, mitigation or other reduction as a result of
any amounts or benefits paid or offered to be paid to you as a Retention
Bonus. Further, the foregoing amounts and benefits will not be subject
to any offset, mitigation or other reduction as a result of your
receiving salary or other benefits by reason of your securing other
employment.
Homeland will also continue your coverage under the Welfare
Benefit Arrangements for a period of one year after the date your
employment terminates, provided that if Homeland is unable to or chooses
not to continue any such coverage for all or any portion of such period,
it shall not be obligated to provide such coverage and shall instead pay
you (within 15 days after such coverage is to cease) an amount equal to
(A) the remainder of (x) 12 minus (y) the number of months that such
coverage is actually provided times (B) the monthly amount it would have
paid (or, in the case of any self-insured arrangement, the monthly cost
per person budgeted for coverage) under the applicable the Welfare
Benefit Arrangement.
The amounts payable to you under this paragraph 8 and the
amounts, if any, payable to you in accordance with the provisions of
paragraph 5 shall be paid in full satisfaction of the liabilities of the
Homeland Group to you under this agreement and in conjunction with your
termination of employment (and shall be in lieu of any severance
payments to which you would otherwise be entitled under Homeland's gen-
erally applicable plans, policies or procedures). Nothing in the
preceding sentence shall be interpreted to limit in any way any rights
or release any obligations that you may have with respect to your
ownership of any shares of Stock.
9. Minimum Benefit
Notwithstanding anything else in this letter agreement to
the contrary, if (i) you are entitled to receive the benefits provided
under paragraph 8 and (ii) the sum of the amounts that would have been
payable to you in conjunction with Homeland's generally applicable
special retention program and severance policy exceeds the sum of the
amounts payable to you under paragraphs 5 and 8, Homeland shall also pay
you an amount in cash equal to such excess. Any amount payable under
this paragraph 9 shall be paid as soon as practicable (but not later
than 30 days) after your termination of employment in accordance with
paragraph 8.
10. Termination of Employment Prior to a Change of Control
Upon the termination of your employment by Homeland for
other than Cause (as hereinafter defined) prior to a Change of Control,
Homeland will pay you the severance benefits payable to you in
accordance with Homeland's generally applicable plans, policies or
procedures. In the event that you obtain other employment during the
period with respect to which severance benefits are payable to you
hereunder, such severance benefits shall be subject to offset or other
reduction in accordance with Homeland's generally applicable plans,
policies or procedures.
The amounts payable to you under this paragraph 10 and the
amounts, if any, payable to you in accordance with the provisions of
paragraph 5 shall be paid in full satisfaction of the liabilities of the
Homeland Group to you under this agreement and in conjunction with your
termination of employment. Nothing in the preceding sentence shall be
interpreted to limit in any way any rights or release any obligations
that you may have with respect to your ownership of any shares of Stock.
For purposes of this letter agreement, "Cause" is defined to
mean (a) your willful failure to substantially perform your duties and
continuance of such failure for more than 30 days after Homeland
notifies you in writing that you are failing to substantially perform
your duties, setting forth in reasonable detail the manner in which you
are failing so to perform your duties; (b) your engaging in serious
misconduct which is injurious to Homeland; or (c) your conviction in a
court of proper jurisdiction of a crime which constitutes a felony.
Notwithstanding the foregoing, you shall not be deemed to have been
terminated for Cause unless and until there is delivered to you a copy
of a resolution, duly adopted by Homeland's Board of Directors, finding
that Homeland has "Cause" to terminate you as contemplated in this
paragraph. In the event that Homeland shall terminate your employment
for Cause, Homeland shall only be obligated to pay you (a) your Actual
Base Salary earned through the date of such termination, (b) all
benefits due and owing through the date of such termination, and (c) the
amount necessary to reimburse you for expenses incurred prior to the
date of such termination for which Homeland has agreed to reimburse you
as provided in this letter agreement and, to the extent provided under
Homeland's generally applicable policies and procedures, any unused
vacation time.
11. Arbitration
Any dispute or controversy arising under or in connection
with this letter agreement shall be settled exclusively by arbitration
in Oklahoma City, Oklahoma, in accordance with the Commercial
Arbitration Rules of the American Arbitration Association then in
effect.
12. Binding Effect
This letter agreement shall inure to the benefit of and be
enforceable by your personal or legal representatives, executors,
administrators, heirs, distributees, devisees and legatees. If you
should die while any amounts would still be payable to you under this
letter agreement if you had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of
this letter agreement to your personal or legal representatives,
executors, administrators, heirs, distributees, devisees, legatees or
estate, as the case may be.
13. Indemnification
Homeland agrees to indemnify you to the fullest extent
permitted by applicable Delaware law as in effect from time to time.
14. Notices
All notices and other communications required or permitted
to be given under this letter agreement shall be in writing and shall be
deemed to have been given if delivered personally or sent by certified
express mail, return receipt requested, postage prepaid, to you at 4229
Northwest 144th Street, Oklahoma City, OK 73143, or to Homeland at 400
N.E. 36th Street, Oklahoma City, OK 73105, Attention: President, with a
copy to Clayton, Dubilier & Rice, Inc., 126 East 56th Street, New York,
NY 10022, Attention: B. Charles Ames, or to such other address as either
party shall specify by notice to the other.
15. General Provisions
No provisions of this letter agreement may be modified,
waived or discharged unless such modification, waiver or discharge is
approved by Homeland's Board of Directors and is agreed to in a writing
signed by you and such Homeland officer as may be specifically
designated by the Board. No waiver by either party hereto at any time
of any breach by the other party hereto of, or compliance with, any
condition or provision of this letter agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar provisions
or conditions at the same or at any prior or subsequent time.
No agreements or representations, oral or otherwise, express
or impled, with respect to the subject matter hereof have been made by
either party which are not set forth expressly in this letter agreement.
The invalidity or unenforceability of any one or more provisions of this
letter agreement shall not affect the validity or enforceability of any
other provision of this letter agreement, which shall remain in full
force and effect. This letter
agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original but all of which together will
constitute one and the same instrument.
The validity, interpretation, construction and performance
of this letter agreement shall be governed by the laws of the State of
Oklahoma, without giving effect to its conflict of laws provisions.
* * * *
If the foregoing accurately sets forth the terms of your
employment with Homeland, please so indicate by signing below and
returning one signed copy of this letter agreement to me.
Sincerely,
HOMELAND STORES, INC.
/s/ Max E. Raydon
-----------------------------
Max E. Raydon, President and
Chief Executive Officer
ACCEPTED AND AGREED
as of this 15th day
of August, 1994
/s/ Steve Mason
- - --------------------
Steve Mason
Divestiture Proceeds
Gross Per Share Range Net Per Share Range Cumulative $MM Share of Distribution
($ in Thousands)
$0.00 $1.73 $0.00 $1.73 $0.00 $ 0
1.73 1.83 1.73 1.82 0.33 20
1.83 1.92 1.82 1.90 0.70 50
1.92 2.02 1.90 1.98 1.11 70
2.02 2.11 1.98 2.07 1.56 100
2.11 2.21 2.07 2.15 2.05 140
2.21 2.30 2.15 2.23 2.67 170
2.30 2.40 2.23 2.30 3.14 210
2.40 2.49 2.30 2.38 3.75 250
2.49 2.60 2.38 2.47 4.51 300
2.60 2.71 2.47 2.56 5.35 360
2.71 2.82 2.56 2.64 6.26 420
2.82 2.94 2.64 2.73 7.25 480
2.94 3.05 2.73 2.81 8.32 550
3.05 3.16 2.81 2.88 9.47 630
3.16 3.27 2.88 2.96 10.69 710
3.27 3.38 2.96 3.03 12.00 800
3.38 3.49 3.03 3.11 13.30 890
3.49 3.60 3.11 3.18 14.60 970
3.60 3.71 3.18 3.26 15.90 1,060
3.71 3.82 3.26 3.33 17.20 1,150
3.82 3.94 3.33 3.40 18.60 1,230
3.94 4.05 3.40 3.48 19.60 1,320
4.05 4.16 3.48 3.55 21.10 1,410
4.16 4.27 3.55 3.63 22.40 1,490
4.27 4.38 3.63 3.70 23.70 1,580
4.38 4.49 3.70 3.77 25.01 1,670
4.49 4.60 3.77 3.85 26.31 1,750
4.60 4.71 3.85 3.92 27.61 1,840
4.71 4.83 3.92 3.99 28.91 1,930